The CLARITY Act Just Cleared the Senate Banking Committee - What Happens Next?

The Digital Asset Market Clarity Act passed the Senate Banking Committee today in a 15-9 vote, advancing the most significant piece of crypto legislation ever to reach this stage in Congress.

What was said during today’s CLARITY markup, and what’s the next step in the bill’s passage into law?

What Happened in May 14’s Markup

Senator Elizabeth Warren led Democratic opposition from the opening gavel, calling the bill "just not ready" and arguing Congress should be capping credit card interest rates rather than writing rules for the crypto industry. Every Democratic amendment offered during the session was either voted down or rejected by Chairman Tim Scott on procedural grounds.

Meanwhile, the ethics issue, a Democrats' core demand that the bill include conflict-of-interest provisions targeting elected officials profiting from crypto, still remains unresolved. 

The Banking Committee does not have jurisdiction over that language, meaning it cannot be added at this stage and must be negotiated separately before a floor vote.

What the Bill Does

The CLARITY Act draws a statutory line between digital commodities and securities, a critical distinction that has been litigated in court and guessed at by builders across the industry for the better part of a decade. Most blockchain-native tokens land on the commodity side, handing the CFTC exclusive jurisdiction over their spot markets.

The SEC keeps oversight of investment contract assets, but its reach over crypto will become significantly narrowed. Moving forward, digital commodity exchanges, brokers, and dealers will register with and answer to the CFTC.

Meanwhile, DeFi gets explicit statutory protection. Activities that do not involve controlling customer funds, such as running validators and providing non-custodial infrastructure, are excluded from the bill's registration requirements entirely.

On stablecoins, passive yield is banned. However, all is not lost for crypto-natives. While passive yield is strictly off the table, activity-based rewards are still in play, suggesting that transactions, trading volume, and platform use can still stimulate cashflow for stablecoin holders under the Tillis-Alsobrooks compromise that saved the bill in May.

What Happens Next?

Today's vote sends the CLARITY Act to the Senate floor. However, before this can happen, it first needs to be merged with the Senate Agriculture Committee's companion bill, the Digital Commodity Intermediaries Act, which cleared committee on a 12-11 party-line vote back in January.

Once merged, Senate leadership has to find 60 votes on the floor. That means at least seven Democrats beyond today's single supporter, Senator Ruben Gallego of Arizona, need to come aboard. 

While it may sound like a tough ask, convincing the floor to join the pro-crypto side has been accomplished before. Last year, the GENIUS Act stablecoin bill cleared the full Senate 68-30 with 18 Democrats.

If the Senate passes it, the bill then heads to reconciliation with the House, which approved its own version of the legislation last autumn. The White House has set July 4 as its target for a presidential signature, which requires the Senate and House to move fast.

CLARITY’s Unresolved Ethics Problem

The unresolved conflict-of-interest fight is the single biggest threat to the CLARITY Act’s future. Currently, Democrats are adamant that they will not vote for final passage without ethics language designed to prevent elected officials from profiting from crypto while in office. 

Without sufficient checks in place, the industry risks facing continued scrutiny over existing debacles like the Trump family’s long and checkered history with its various crypto endeavors.

Meanwhile, the White House has been equally firm in the other direction. Adviser Patrick Witt said at Consensus Miami that the administration will accept rules that apply "across the board, from the president all the way down to the brand new intern on Capitol Hill," but will reject anything that singles out a particular office or officeholder.

What Does This Mean for Solana?

Under CLARITY, most Solana-native tokens are likely to qualify as digital commodities under the bill's framework, which means CFTC jurisdiction rather than the SEC's. 

Protocols operating non-custodial infrastructure across the network are expected to get direct statutory protection under the DeFi exemption, giving investors the regulatory clarity they’ve been waiting for for many years.

Unsurprisingly, crypto markets rallied hard following the announcement, with $BTC up 3.4% on the day. Crypto-based public companies also enjoyed impressive moves, with Coinbase (COIN), Galaxy Digital (GLXY), and Circle (CRCL) gaining ~6% within the session.

All eyes now turn to the Senate floor, though chances of the CLARITY act eventually passing are looking more favorable than ever. Polymarket data is currently giving the CLARITY Act a 71% chance of being passed into law before the end of the year, suggesting growing conviction among market participants.

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